FILE PHOTO – The logo and ticker for Capital One are displayed on a screen on the floor of the New York Stock Exchange (NYSE) in New York, U.S., May 21, 2018. REUTERS/Brendan McDermid(Reuters) – Online banks, such as Ally Financial Inc (ALLY.N) and Capital One Financial Corp (COF.N), are expected to take a bigger chunk of the overall U.S. deposit market, after racking up $95 billion in customer deposits this year with enticing yields on most savings accounts. Online savings banks are starting to take market share away from traditional consumer banks, increasingly offering higher interest rates on deposits to a new generation of savvy, affluent consumers, who want higher payouts on their deposits. According to analysts at brokerage Evercore ISI, these online banks have now cornered about 10% of the overall deposit market in the U.S. – or roughly $1.26 trillion. “There are now a dozen plus online only savings banks (and some of the E-brokers) offering much higher yields as a way to entice deposit growth … and it’s working,” Evercore said in research note. The 10 largest banks led by Bank of America Corp (BAC.N) currently dominate industry deposits, owning a 48% share, or roughly $6.13 trillion, according to the report. Limited overhead and regulatory-light models have helped large online banks pay five to 10 times more on deposits than traditional consumer banks, said the report. The market share of these online banks have more than trebled in the last decade, buoyed by higher rates during a low-rate environment, among other things. The brokerage also expects growth in deposits to improve in the near future as new entrants are expected to grab market share from smaller players who have not upgraded their computer systems. Newer entrants have so far edged out smaller peers by being more tech-savvy and also by offering better rates to consumers. Reporting by Abhishek Manikandan in Bengaluru; Editing by Bernard OrrOur Standards:The Thomson Reuters Trust Principles.

Source link

Leave a Reply

Your email address will not be published.